Programming and Other Inventory

9 Months Ended

Sep. 30, 2020

3) PROGRAMMING AND OTHER INVENTORY

We acquire rights to programming and produce programming to exhibit on our broadcast and cable networks, on our broadcast television stations, direct to consumers through our digital streaming services, and in theaters. We also produce programming for third parties. Programming inventory costs for both acquired and internally-produced content are recorded within the noncurrent portion of “Programming and other inventory” on the Consolidated Balance Sheet. Prepayments for the rights to air sporting and other live events that are expected to be expensed over the next 12 months are classified within the current portion of “Programming and other inventory” on the Consolidated Balance Sheet.

Internally-Produced Programming

Costs incurred to produce television programs and feature films (which include direct production costs, production overhead, acquisition costs and development costs) are capitalized when incurred. For television programs that are predominantly monetized as part of a film group, capitalized production costs are amortized based on an estimate of the timing of our usage of and benefit from such programming. For television programs and feature films that

are predominantly monetized on an individual basis, we use an individual-film-forecast computation method to amortize capitalized production costs and to accrue estimated liabilities for participations and residuals over the applicable title’s life cycle based upon the ratio of current period revenues to estimated remaining total gross revenues to be earned (“Ultimate Revenues”) for each title.

Acquired Programming Rights

Our acquired programming rights are predominantly monetized in film groups together with certain internally-produced programming and other acquired programming rights. Costs incurred in acquiring program rights, including advances, are capitalized when the license period has begun and the program is accepted and available for airing. These costs are amortized over the shorter of the license period or the period in which an economic benefit is expected to be derived based on the timing of our usage of and benefit from such programming.

We test a film group or individual television program or feature film for impairment when events or circumstances indicate that its fair value may be less than its unamortized cost. An impairment charge will then be recorded for any difference between the carrying value and estimated fair value of the film group or individual television program or feature film. In addition, unamortized costs for internally-produced or acquired programming that have been substantively abandoned are written off.

The following tables present our programming and other inventory by type at September 30, 2020 and December 31, 2019. Programming inventory at September 30, 2020 has been grouped according to the predominant monetization strategy in accordance with new FASB guidance adopted in the first quarter of 2020 (see Note 1).


	At
	September 30, 2020
Film Group Monetization:
Acquired television program rights, including prepaid sports rights		$	3,408
Internally produced television programming:
Released		2,912
In process and other		898

Individual Monetization:
Acquired libraries		496
Film inventory:
Released		400
Completed, not yet released		311
In process and other		1,042
Internally produced television programming:
Released		937
In process and other		740

Home entertainment and Publishing, primarily finished goods		90
Total programming and other inventory		11,234
Less current portion		1,869
Total noncurrent programming and other inventory		$	9,365


	At
	December 31, 2019
Acquired television program rights, including prepaid sports rights		$	3,477
Acquired libraries		99
Internally produced television programming:
Released		3,627
In process and other		2,626
Film inventory:
Released		502
Completed, not yet released		55
In process and other		1,037
Home entertainment and Publishing, primarily finished goods		105
Total programming and other inventory		11,528
Less current portion		2,876
Total noncurrent programming and other inventory		$	8,652

The following table presents amortization of television and film programming and production costs, which are included within “Operating expenses” in the Consolidated Statements of Operations.


	Three Months Ended			Nine Months Ended
	September 30, 2020			September 30, 2020
Programming costs, acquired programming		$	839		$	2,525

Production costs, internally produced television and film programming:
Individual monetization		$	606		$	2,129
Film group monetization		$	662		$	2,082

Included in the table above for the nine months ended September 30, 2020, are programming charges of $121 million primarily related to the abandonment of certain incomplete programs resulting from production shutdowns related to COVID-19. The programming charges are included within “Operating expenses” in the Consolidated Statement of Operations with $66 million, $50 million and $5 million included within the TV Entertainment, Cable Networks and Filmed Entertainment segments, respectively.